The fix can certainly involve appealing to morals and human responsibility. A company is, after all, just a group of people. This should be a very strong tactic considering how liberal Silicon Valley is. The major players preach constantly about progressive ideals, yet fail to do more than the minimum when push comes to shove. My business partner and I purposefully pay normal taxes, avoiding accountants' crazy tax reduction schemes, because we think it's the right thing to do. We're a tiny speck compared to Apple, but the principle still applies. If the big players made it the norm, their investors would suck it up and deal with it.
>The fix can certainly involve appealing to morals and human responsibility...
Are you really suggesting the management and board of every major company in the world should meet to decide how much tax they should choose to pay each year? Even if they did, where should they choose to pay it? Should Apple Pay more tax in China where the phones are assembled? In America where they are designed? In the countries where they are sold? What criteria do they use to decide?
That might conceivably work for one company, on some tax issues, for a while. These are companies that operate simultaneously in multiple countries with different tax systems. They can’t be expected to choose to pay more tax here or there.
I do agree these companies pay too little tax, but expecting them to pay more voluntarily is never going to work.
That's not true. Here's just one example: fine-grained taxes are used to help influence behavior, improving public health. Mexico increased taxes on sugar [0], with the result being a fall in consumption. Raising this tax has caused a verifiable reduction in consumption, which has a direct impact on public health[1]. That's just one example, many more exist for all sorts of reasons. It's why cigarettes and alcohol are taxed differently than broccoli. Obviously not all taxes are in the public interest, but neither are they just to give some government official a feeling of empowerment.
Many people believe this is an overstep on the government's part. These people believe it's not the government's job to be paternalistic and nudge people into the "right direction".
This is based on the complete abhorrence of "scope creep" mixed with near total surveillance and control over the use of force. Those with that much power should not be able to enforce social mores, even if they reflect the will of the people at the time.
What if we frame it as a financial problem, not a well-being problem. Argument: it is in everyone's best interest if fewer people smoke. Smoking overwhelmingly affects poorer citizens who are already more reliant on social services. And since effects are tied to age, older smokers will more heavily put a burden on both the healthcare system as well as the entire insurance market (including Medicare/ Medicaid). Ergo it is in everyones best interest to disincentivize as many people from smoking as possible. Raising a tax on cigarettes is a cheap, quick, and effective means to do so, while raising funds for the very same health services they are likely to be using in the future.
However in a democracy those people are merely one constituency among the electorate, the rest of whom like to have things like police forces, emergency response services, shared infrastructure such as road networks, enforced assurances of the quality of consumer goods and services and many other things that a well funded government can provide. Unfortunately that funding has to come from somewhere and making choices about where the funds come from requires making judgements on such things.
Your ultra simplistic idea has been tried before to some extent. It doesn't work.
VAT is a trivial tax to avoid since it involves the business letting the tax department know how much tax they collected. So what happens is that they under report either (a) by flat out lying or (b) doing more business in cash or through a barter system.
Also it is incredibly regressive rewarding the rich (who are generally hoarding money not spending) and punishing the poor (who spend a larger portion of their wealth on consumable spending which is subject to VAT).
That's why many countries have a VAT but none of them solely rely on it.
Many countries have multiple VAT rates for different goods. Staple food and other basic goods, which constitute a larger part of a poor person's spending, are in lower rates.
Given your comments, we seem to be similarly minded. What do you think about a wealth tax? To me, that would be the most appropriate given that incomes can vary year to year. Corporate taxes are a separate matter altogether, IMO, since corps just include their tax burden in the price of the products.
edit: What I'm thinking is some sort of total asset valuation placing one in a given bracket, rather than income level. While income tax is income tax, regardless of short-term/long-term capital gains (35%/15%, USA), or salary.
How well would that apply to assets that are hard to measure the value of? Ie a house, a business or a painting even. I think it would encourage a system where people somehow minimize what their assets appear to be worth - or how well they can be measured.
Given how Prop 13 was enacted to not push existing homeowners out of their homes if their property values increased significantly, would there be a similar push under such a system?
That’ll work great if every nation simultaneously agrees to it, but is potentially catastrophic if they don’t: all the tax-dodgers move to your country for tax purposes while continuing to make and sell everything else exactly as before.
And if every nation agreed to have identical tax laws, we wouldn’t have a problem with lawful multinational tax minimisation in the first place, because there would be no advantage to it.
It forces them to unify everything except VAT (and land tax). Or, and I only realised this just now, do something complicated with imports, customs, and how to handle cross-border sales of digital goods (the EU does this, but it is a mess).
If I had to guess, I’d suggest haven’t already done what you suggest for at least one of these reasons:
1) because it’s economic mutually assured destruction
2) because tax codes are long and complicated (and sometimes deliberately written as political favours), and they’re as afraid of touching it as PayPal are of touching whatever Musk wrote 20 years ago.
3) because businesses that have revenue (Apple, $229bn) comparable to the GDP of the nations whose tax systems they are exploiting (Ireland, $293bn; Luxembourg, $59bn) is novel and governments are slow to adapt.
I don't know for sure, but is it appropriate to use gross GDP numbers instead of GDP/capita? When one is choosing which metrics to use, bias is introduced.
Depends what you’re comparing. Gross economic force of two entities? Raw GDP; Quality of life? GDP-PPP/capita is better.
Private citizens don’t generally get to threaten governments by moving abroad to withold their taxes — and even when they do (I kinda am!) it’s so completely irrelevant it isn’t worth the government’s time to bother to check if it’s actually happening or just a loudmouth blowing off steam by saying they will.
To an extent it already has in the EU in which every country is required to impose a VAT compliant with EU rules, although they have some leeway on the rates and goods covered.
On the other hand, there are countries out there that do very well out of having tax codes that wouldn't work for big industrialized countries, or countries part of a big unified trading bloc. They have strong incentives to keep their tax codes the way they are.
I'm American, and thus not terribly familiar with the details of VAT. Is there anything about how it works that makes it less regressive than a simple sales tax? Sales tax as it exists in most US states is just about the most regressive tax scheme imaginable.
The only difference between sales tax and VAT is that VAT is applied at each stage of the production/sales chain, but only on the incremental value added at each stage, whereas sales tax is applied only at the very end of the chain on the entire value. The advantage of sales tax is that only the retail seller needs to worry about collecting it, and the advantage of VAT is that you don't need rules to figure out which stage along the chain is supposed to be the "final" one. (Consider small businesses buying product from a place like Costco. They either get double-taxed, or have to get some sort of exemption.)
In terms of the actual money collected, the two are the same. An X% tax rate results in the retail buyer paying X% more.
The basic answer is that the progressive European countries primarily funded through VAT are indeed using a regressive taxation system, but countering it with progressive spending.
The US system is a moderately progressive tax system but less progressive spending (not no progressive spending, but not nearly as much).
The argument is that you "buy off" the wealthy interests (both wealthy individuals and corporations) by using a regressive tax system, so they are happier to let you spend the money progressively, while in the US they are constantly fighting any progressive spending, because any tax cut will benefit them greatly.
"My business partner and I purposefully pay normal taxes, avoiding accountants' crazy tax reduction schemes, because we think it's the right thing to do. We're a tiny speck compared to Apple, but the principle still applies. If the big players made it the norm, their investors would suck it up and deal with it."
I suspect that you and your partner have significantly more control over your enterprise than the officer of a public company does though. If you didn't your investors wouldn't suck it up, they would do as they see fit, which may be agree with your position or may be replace you.
Public companies are controlled by their share price more than they like to admit. Even if you are like Zuck and maintain complete management control of your public company, if that share price takes a huge hit it becomes very hard to attract and maintain talent/future investment/etc. Everyone has some authority to answer to.
Which is why I think the current scheme of publicly traded companies at base is flawed. Earlier this week someone posted something along the lines of, once you become public your product is stock, not whatever you produce.
I think we ought to use the power of the executive to straight up revoke charters to businesses that are American that engage in these schemes. Something I learned about while reading about the British and Dutch east India companies.
If all the air molecules in a box spontaneously moved to one side of it at the same time, you could defeat entropy. This is no more likely to happen than the big players making it the norm to avoid tax reduction schemes.
In a box filled with air, molecules moving to one side leave a gap which results in increased pressure for molecules to move the other way. The same is true of big companies and taxes. You might be able to find some companies who would do this, and investors who prefer money to vague morality (and there's a lot of them) would abandon those companies and put more money into companies who avoid taxes as much as legally possible.
If we want to stop this behavior, the solution must be to make it illegal. Appealing to morality isn't going to get it done.
Consider that many industries literally kill people by poisoning the air or water. Not killing people as a moral principle is a lot more universally held than the idea of paying more tax than you're legally required to, but moral pressure didn't work there. Laws did.
That is where you are wrong. A cannot be thought of as a "group of people". A company is a legal entity, which can do absolutely ANYTHING within the law. It, the corporation, will by default do everything in its power to maximize shareholder value and that is it.
Beyond that, there's Corporate Social Responsibility, but of course that is downstream from the corporation's main objective, which is to maximize profits.
The corporation is to be understood as an "individual" and is legally so, but one which has limited legal liability.
Once upon a time, corporations were chartered, to better serve the public good. Our (USA) founding fathers suffered under the yoke of corporations (eg East India Company, Boston Tea Party) and were wise to limit their power.
Then some yahoo slipped in some legal precedent declaring corporations were legally natural persons, weaponizing the 14th amendment. And here we are today pretending that corporations are super persons, with more rights than actual people, but none of those profit sapping responsibilities.
That's a distinction I haven't thought much about because I'm not sure I've contemplated the pure definitions. Without knowing how you mean these words, I would say starting from first principles, we optimize for liberty (at least in the US, YMMV). Then we consider factionalism, and it's usual cause: inequality (or it's mis-perception).
Well, this was an unpopular comment. How do we properly incentivize progress and innovation? This is the safest, most prosperous time to be alive in the history of humanity, despite what you have been told.
> How do we properly incentivize progress and innovation?
There is no progress or innovation without qualifiers.
> safest, most prosperous
And most depressed, most suicidal, most alienated, most amok running, most hysterical, most sophistry laden, most marketing raped, most mass produced, most polluted times ever. Millionaires today are poorer than paupers, artists today are more cloned and out of touch with themselves and the world than random citizens of other times and places. The ones who aren't 100% market whores, anyway, who at least pretend to themselves they're artists. We went from turning our world into meaninglessness to turning our selves into meaningless, mass produced objects.
We can't even afford to make something for the sake of craftsmanship, or leave a blank space blank instead of smearing marketing. We went from everybody and their dog being a member of 20 and running 5 forums to everybody being on Facebook. We went from RSS to fucking Twitter, who "let users express themselves". Companies openly brag about wanting to create "compelling experiences", marketing people dog food their own idiotic slogans and are now honest when repeating them ad nauseam, because they're now actually this small and weak to actually believe actually all of it. We went from browser makers doing whatever to user agents and back to browser makers doing whatever and users just sitting there and hoping some of that will be fun for them, too. We went from metacrawlers to Google. We went from Apple, Atari, Amiga, IBM-PC to -- a few player essentially all doing the same user hostile, uninspired shit. How many newspapers are owned by how many conglomerates? And look at company names. Herply this, derply that. Look at people's names. Are you meaning to look me in the eye and tell me we're not approaching Idiocracy? 500 years was the science-fiction part about it. Give it 20.
But safety and prosperity? Heh. It's the safety of securely being born dead. The biggest threat used to be death, now there is less and less difference between existing for a while, to shove some franchises in the mental and physical orifices, and not having been born. What does it profit a man? What does a man lose? I can't tell you the answer, but I can tell you who you shouldn't ask for that answer; the man who did lose his soul to gain the dissolution of the world, like some Midas turning things to poop. Nietzsche was right about some things, Erich Fromm was right about others, Hannah Arendt was right about everything, Einstein was right about people and who gives two shits about physics anyway, Orwell and Huxley were on to it, and then there's the thousands of others who I don't know but who all said the same things in various ways. Safety and prosperity? Fuck that. Life isn't safe, the whole universe isn't. Only death wants safety, only fear wants more, life wants to live. And yes, life is more fun when it's not reckless, when it is intentional. Food and shelter and medicine are great. That we focus on power and alienation while pretending they have anything to do with safety and prosperity, that we killed the point of living in the first place, that's the problem.
Sorry for ranting, but you don't get to tell me what I've been told or how I judge things. If it's the safest and best in your opinion, fine. But if you simply state that as fact, you brought nothing to an everything fight.
In the history of that portion of humanity you "belong" to. There are several parts of the world where the last thing people feel before dying is the stink of their own diarrea; or the sound of rockets and drones about to tear them up; or the hopelessness of hunger...
Since you're mentioning statistics, I'll mention the "Polli di Trilussa", whereby if the average says everyone has a chicken to eat and you're not getting any, don't worry because there's someone gorging on two.
Safety of what? Of pure physical life? Wouldn't prospering life imply some kind of vitality?
Then how come we all just sit there and "hope" something will be done about climate change or nuclear proliferation? How come rising drug deaths? How come the need for a dedicated WP page about the suicide problem in Japan? How come the best we can hope for is for some to condemn war criminals - instead of their brothers and fathers and children disowning them as they rot in jail? How come Trump is president and Snowden can't go home? Prosperity? We cannot even afford same rights and laws applying to all period. We shine the boots of crazy sadists who get nothing out of it but a prolonging of their suffering and the damage they cause, and we just bite our lips and give a sympathetic shrug to those who should be in their place, or at least not get trampled in the dirt.
Not that I'm saying there was ever justice for all, but we know a lot these days, we can do a lot these days, we have a lot these days; we could technically afford a striving towards instead of away from justice, just like we could afford everybody on the planet having food and shelter. Just like there is no need to plunder and mutilate language and thought, but we still do it. Workers used to be proud of reading and educating themselves, now even so called intellectuals can't face weighty authors. We truncate at best, and usually ignore outright. Not because that's milk and we now have meat, but because that's meat and we no longer have teeth.
I hardly see anyone who can afford to just take in their surroundings and the people they are faced with. We now actually call movies franchises ourselves, as if the soulless way was the more advanced and correct one. Something "making sense" always has to take the backseat to "making business sense", and boo on anyone daring to more than shrug their shoulder and bite their lip. I see a lot of people who individually have and are nothing, who always have to refer to someone or something other than themselves. My main criticism isn't historical, it's that I see people getting weaker and lamer by the year, more and more without thoughts that are truly their own, everything is being handed off.
I remember that recent discussion about tech "taking Saudi money", and many pointing out that it's just money. We cannot afford to distinct between 10$ taken from the purse of an elderly woman, and 10$ earned by fixing a chair. That's the biggest destruction of information I can think of. Oh, and we no longer can afford to print things on paper, and what we print on paper today often doesn't last as long as older books, kind of like houses. Please download the manual from a website that will be gone in N time units. Please upload your "culture" to YouTube, and put all your means of contact into the hands of Gmail and Facebook, put your free time into the black holes of EA and Disney and stream your reactions [sic, it should be called facial expression plus mouth noises] on Twitch. Those who do can't afford to talk in the first person singular just because we can't afford anything too grounded, since that would attract other grounded things and before you know it someone is turning on the light in the insane asylum torture chamber, and we can't have that.
You cannot afford owning anything, and oh, we updated the terms of our license, you'll have to agree again to continue using our "services". We serve you. Just like in "the industry", we're being industrious.
We no longer can afford to be alone with our thoughts and creations, and judge their value freely. Yet if that goes for everybody else, with what authority do we outsource judgement? And if it doesn't, with what authority do we let our own ability to judge to rot?
> I am using statistics. Do I need to cite sources for you to believe that this is the safest and most prosperous time in the history of humanity?
No, you need to put forward your own definitions, and you haven't even attempted to make the argument why only countable things should count. That in itself is the poverty of thought I am also referring to. You might say you're making part of my point for me.
Can you seriously look at the state of politics and business and tax evasion in 2017 and really believe most executives, even in Silicon Valley, are susceptible to "moral persuasion"?
If they were, they would already be acting in the way you think they should.
True, but what then can stop this evil entity called Apple and all the rest of them?
Only children and the very slow still believe in "democracy", which is obviously just another name for the rule of those who own the media and/or are rich enough to bribe politicians.
What other recourse is left but the threat of violence to the physical individuals that in reality control the imaginary legal persons called corporations?
Too bad what passes for the "left" these days is busy fawning over Tim Cook's homosexuality while the sick become homeless and the globalists vacuum the earth for profits. It almost makes me long for the days when the left was Marxist and we had the Red Army Faction and the Red Brigades, instead of blue hair lesbians and postmodern identity politics.
>Only children and the very slow still believe in "democracy", which is obviously just another name for the rule of those who own the media and/or are rich enough to bribe politicians.
As a citizen of the USA, this is quite a scary thing to read. We may not have attained perfection (or even satisfaction), but it is a process. Each iteration has ultimately improved the world and the underlying principles are sound. It's all about optimization priorities, and I'd prefer to optimize for liberty, not authority.
Government has a monopoly on sanctioned violence, and the only reason it is justified is because of democracy. "We the people," are the first words in the US Constitution.
If you want to give up on democracy, move to a dictatorship. The earth does not have to have the same forms of government in every country/state.
edit: Tell me what you are for, instead of what you are against?
IANAL but it is my understanding that if those tax reduction schemes are legal many companies are legally bound by their stock holders to exploit them, or else be found negligent in their duties.
>... if those tax reduction schemes are legal many companies are legally bound by their stock holders to exploit them, or else be found negligent in their duties.
That's not the case. There is no way a company's management could be sued for "gross negligence in tax planning".
If shareholders are unhappy about this issue, their recourse is the same one that's always available to them: elect a new Board of Directors and hire new management that will follow the board's guidance on tax evasion schemes.
I admit to be completely out of my depth, but my understanding is that it is a fiduciary duty of the directors to act in the best interest of the shareholders. Tax planning is a huge part of profit and thus shareholder value, so wouldn't such "gross negligence" represent a breach of fiduciary duty?
Suing directors for negligence is not easy at all. It's hard to imagine a shareholder lawsuit that basically says: "As a director you didn't guide management to move operations to Jersey, so we want you to pay us $100 million"... It's even harder to imagine a US court being friendly to such a case.
The greatest example of board negligence in this industry (that I can think of) in recent years would be when Hewlett-Packard's board hired Léo Apotheker as CEO in 2010. The board members had never met the man and his career had been on a different continent, yet they didn't even interview him in person before giving him the job!
Apotheker spent $10.2 billion to buy a British company named Autonomy. Soon after he was fired. Only a year later, HP was forced to write down $8.8 billion of Autonomy's purchase price.
That enormous loss was directly the fault of HP's board for hiring such a terrible CEO and letting him do the terrible deal. But shareholders didn't have any recourse; the best they could do is vote on a new board.
What if the reason big companies avoid tax is that the shareholders ensure someone values fiscal results over supporting the country they earned the finance in is in the directors chair.
Yes, that's exactly why American corporations do the things they do.
It's not a legal obligation though. Shareholders could choose to have corporations managed differently. That kind of "pro-tax" activist shareholders don't exist, but it's not inconceivable that large public funds (pensions etc.) could become such.
Perhaps if governments started penalising corporate tax avoidance by confiscating a percentage of a company's shares the shareholders would be incentivised to make sure whoever is running the company will pay taxes fairly.
If companies are duty-bound to act unethically (if legally) for the sake of share holder profits then I think that speaks to a flaw in the system driving these decisions.
This is a common misperception, but it is incorrect. There is no fiduciary duty to avoid or minimize tax, and conversely no legal duty to maximize taxes either. It is up to each company to choose how aggressively they pursue these tax-avoiding strategies.
They're only thus bound if increasing stakeholder returns over time is an explicit condition of their contract (which I imagine is the case for executive contracts in many if not most public companies, though I don't know - can anyone confirm?)
But there's nothing in the (US, at least) legal definition of a fiduciary that proscribes increasing share holder profits by any means necessary. That's simply a convenient myth spread to normalize cutthroat, profit-seeking behavior at all levels of business.
This is going to be tough. I think a big advantage of something like a board or a committee is the diffusion of responsibility. I'm not going so far as to say these constructions are immoral, but they definitely make it easier for their members to distance themselves from their decisions.
Could shareholders sue if Apple “opted out” of their legal tax avoidance strategy? We are talking about some very material money here, not an executive bonus pool sized chunk of cash, but like national GDP sized money.
Tim Cook has made statements in the past that they stick to the letter and the spirit of the law.
The least they could do is report these tax loopholes: post them publicly to make it easier for the government to close them. Instead, they are kept a secret. Why do you think that is?
Apple takes advantage of no loopholes. By law profits in international subsidiaries aren't taxed in the US until they are paid to the US company. Apple is simply keeping the already taxed profits overseas in the lowest tax jurisdiction until the US gives them a repatriation discount.
We clearly have different definitions of the word loophole. They are moving profits around "creatively" in order to pay less than the corporate tax rate. Why should the U.S. have to give a repatriation discount when they have already paid a much lower effective tax rate than many other corporations?
There is no "repatriation discount". It's tax deferral just like a 401k or not selling profitable stocks at the end of a year. And Apple pays higher tax rates than most multinational corporations.
Apple can't return their foreign profits into the US or they lose this deferral, so where should they keep those profits until they do? Germany? France? Why on earth would you keep your money in higher tax countries? Why wouldn't you keep it in Ireland or the Channel Islands instead? It's not illegal, it's not even unethical.
It would be the height of stupidity to leave those profits in a high tax country. And the taxes they save are relatively minor overall. It works like this.
Apple earns about two thirds of it's profits in foreign countries. Over the last decade or so that's been around $225 Billion. They've paid about $25B in income taxes on those amounts (we'll ignore the huge amounts of VAT and employee taxes they've paid), so there is about $200B left.
If they brought it all back to the US, they'd owe the state of CA around $20B in taxes, and the Federal government around $63B in taxes. If they paid the $117B remaining as dividends, their shareholders would pay over $20B more in state and federal dividend taxes.
Let's recap. They made $225B, bringing it all back would mean mean various governments would get $128B in taxes, and the owners of the company $97B, a tax rate of over 60%.
So instead they keep the $200B in the lowest tax rate location possible while they wait for a US repatriation holiday with lower tax rates. They might earn 5% on that money, or $10B a year. If they kept it in a high rate european country, they might pay another $2B a year in taxes on the interest, but instead they got a deal from Ireland where they paid less than 1%. So they save $2B a year, but they will eventually pay nearly $100B more in taxes when they repatriate it. That's trivial in the grand scheme.
And that was a screaming deal for Ireland, because they didn't have to pay anyones unemployment benefits, or build any roads, or give Apple any "incentives" to build something. Ireland just let them make huge bank deposits in Irish banks, which turned around and lent the money out again, mostly to Irish companies, which created a massive amount of jobs and more taxes.
Not only is Apple doing nothing wrong, but they are doing a great deal of good too.
You are mixing a lot of things together and it's making it confusing for me.
Dividends, income taxes are a separate matter. If you think the combined tax rate of corporate + dividend + income taxes is too high, then you should say that directly and have the discussion be about that.
This discussion has been about whether Apple is taking advantage of the tax code in order to not have to pay the 35% federal corporate tax rate. They could easily bring things back to Nevada (they do already to some extent is my understanding) and avoid the California corporate tax.
So all that being separated out your argument basically strikes me as: the corporate tax rate is too high so of course Apple is going to take advantage of tax shelters in order to avoid paying it.
I think this story is getting people upset because multinationals should not be free to leverage countries against one another in order to avoid paying corporate taxes. On paper Apple is a multinational corporation but both you and I know that it was American taxpayers who educated most of their employers. It was American taxpayers who provided a safe and prosperous environment for the corporation to flourish. And therefore, morally speaking, if the U.S. wants to tax Apple at a rate of 35%, then it should be able to. Unfortunately the world's tax codes have enough complexities still in them that all multinational corporations can avoid paying these taxes, while smaller corporations such as the one alluded to by the first comment in this thread do not have the capacity to avoid the taxes. This is what strikes me as against the "spirit" of the law. At the very least, multinationals should be more white-hat: sure, find and exploit complexity in the international tax code. But then you should report these things to the federal government. Maybe if there was a bounty :)
Effectively if your tax arrangements are weird enough they have to be submitted to a judicial-like body to determine whether they are for some sort of legitimate business purpose or purely for the purpose of tax avoidance. An example: https://www.gov.uk/government/uploads/system/uploads/attachm...
"Paragraph C5.6.7 of the Guid
ance states “[the GAAR] rejects the
proposition that taxpayers have unlimited freedom to use their ingenuity to
reduce their tax bills by any lawful means"
"The reward was structured in the
following way: a purchase of gold for
the Employees was funded by the Company; that gold was immediately sold
by the Employees
;
the Company’s liability to pay the third party gold supplier
was settled by the Employees in return for a director’s loan account credit in
favour of the Employees; in connection with the purchase of the gold a long
term obligation was created under which the Employees were required in the
future to pay to the trustees of the EBT an amount at least equal to the
purchase price of the gold (plus indexation)."
Obviously this arrangement is nonsense and is purely for tax avoidance, so the GAAR cuts through the complexity and rules it unacceptable.
Nothing Apple does violates GAAR. It pays all the taxes it owes in every country it does business in, then it takes the remaining profits and moves them to a low tax location because repatriating them to the US would cost at least 40% in additional taxes.
Apple were apparently able to consider both Jersey and the Isle of Man (both British Crown Dependencies) for substantially reducing their tax exposure, so it's presumably questionable, but this is the first I've heard of GAAR. The UK Parliament has the ability to create primary legislation on any matter it wishes in these regions, even if by convention it rarely does, and Jersey and the Isle of Man have had arguably justified reputations as tax havens for a long time in the UK.
One only needs to look at the other leaks in this dump to see the attraction of these locations (Formula 1 driver Lewis Hamilton stashing his private jet on the Isle of Man to avoid a substantial VAT bill etc).
What Apple does is exactly what the US Tax code wants them to do, nothing secret about it. If it were to repatriate it's foreign earnings every year, it's tax rate would skyrocket from it's current 24.6% to around 50% (leaving less than 30% for shareholders after dividend taxes).
"Nothing secret about it"
This is false. From the NYTimes article
https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey....
“For those of you who are not aware Apple are extremely sensitive concerning publicity,” wrote Cameron Adderley, global head of Appleby’s corporate department, in a March 20, 2014 email to other senior partners. “They also expect the work that is being done for them only to be discussed amongst personnel who need to know.”
Every accounting firm does all it's work under NDA. Apples public financials document everything you want to know.
1) They make huge foreign profits and pay substantial income taxes to those foreign countries.
2) They don't repatriate the remaining profits so they don't have to immediately pay the massive US taxes they'd owe if they did so.
3) They record a tax liability for the repatriation taxes they'll owe when they bring the money back.
4) They document they keep the money offshore in the lowest possible tax rate location, as is their legal right, so that they minimize the tax on the interest their funds earn, which is relatively trivial by comparison.
The Paradise Papers doesn't tell you anything other than the specific location. The only thing that would be unethical or immoral would be if they kept the money in London, Paris, or Bonn, because they'd be paying higher taxes on the interest (not the profits) for no reason at all. And since it's not their money, and belongs to shareholders, that would be very wrong.
I've been under various NDAs, and I don't hear anything about keeping things "need to know" within my own organization. This is clearly much more secretive.
Please point to a reference to the isle of jersey in Apple's public financials document. I want to know about evading corporate tax by rerouting profits to tax havens.
1) Most non multinational corporations produce both corporate and income tax revenues. Why shouldn't Apple?
2) Ditto
3) This is like apple writing "IOU" on a piece of paper. That money could be getting used to fund schools, to rebuild infrastructure and it has a time value. All of which Apple is capturing.
You seem to think that money which should be getting taxed by the corporate tax rate somehow "belongs" to the shareholders in some ethical (not legal) sense, and I think this is the root of our disagreement. Ethically, Apple is an American corporation and it was American taxpayers who allowed the company to flourish. Perhaps also some European countries played a role here. Therefore if they want to impose a corporate tax they should be able to, separate from the income and dividends tax.
The whole problem with all of this is that it's very hard (and maybe even intractable?) to define in advance what a "tax loophole" is. If it was easy to define then we could just write it out of the tax code.
I think the only way is for companies to make strong commitments to doing so, so in the case of future leaks like this or further investigative journalism, we would all have something to point to.
A company is not just a group of people. At least, any publicly-traded company has a legal obligation to it's shareholders. The job of the Board of Directors is to ensure that the company is performing as optimally as possible to earn as much as possible for the shareholders. Morals aren't a part of the equation, it's all exploiting the confines of the law.
This is oft-stated, but not really true in a practical sense. If in 2018 parking lots are more profitable than manufacturing, will you see Apple go into the parking lot business?
There's a huge amount of wiggle room and discretion possible even within the obligations to share-holders.
While I understand your point, that is a massive overstatement. Apple doesn't go into the parking lot business because it isn't in their corporate charter[0], which outlines the companies' objectives, structure, and operations. If Apple decided they could benefit by building parking lots then they very well might as long as they could justify the expense.
